Thursday, December 8, 2011

A few readers asked me why is it that the market are still going up despite what we are hearing everyday. Well, if you believe what the press is saying, then if the market is up, that means that the market players are optimistic about the current situation. When the market goes down, then the press will say that they are worried and concerned about the whole situation. This is especially so when you watch the CNA morning show. You can almost confirm what the presenter will say after looking at how the US market has closed and how Japan market has opened.

To me, I believe that as much information, expectation and forecast have already been factored into the market. Like what I stated in the blog many times before, the market is made up of many players, and it is mainly the Big Boys that determine and decide where and how the market will behave in any circumstances.

If the market continues to perform well in the coming days to weeks, then you will read from the press that the market choose to ignore the gloom and doom for a while and stage a year-end rally.

If you look closely, we can have a dire future but the market can still surge on, as it is not what we want or hope for the market that matters, it is how the more powerful hands believe that matters.

That is why it is crucial to know what they are doing and following them through the trend and drop off with them when the tide turns. I am doing so with my trustworthy charts and of course, the experience and knowledge gained and work-on throughout all these years of interaction with Mr Market.

It is a slow day in a little Greek Village. The rain is beating down and the streets are deserted. Times are tough, everybody is in debt, and everybody lives on credit. On this particular day a rich German tourist is driving through the village, stops at the local hotel and lays a €100 note on the desk, telling the hotel owner he wants to inspect the rooms upstairs in order to pick one to spend the night.

The owner gives him some keys and as soon as the visitor has walked upstairs, the hotelier grabs the €100 note and runs next door to pay his debt to the butcher. The butcher takes the €100 note and runs down the street to repay his debt to the pig farmer. The pig farmer takes the €100 note and heads off to pay his bill at the supplier of feed and fuel. The guy at the Farmers' Co-op takes the €100 note and runs to pay his drinks bill at the taverna.

The publican slips the money along to the local prostitute drinking at the bar, who has also been facing hard times and has had to offer him "services" on credit. The hooker then rushes to the hotel and pays off her room bill to the hotel owner with the €100 note.

The hotel proprietor then places the €100 note back on the counter so the rich traveller will not suspect anything. At that moment the traveller comes down the stairs, picks up the €100 note, states that the rooms are not satisfactory, pockets the money, and leaves town. No one produced anything. No one earned anything. However, the whole village is now out of debt and looking to the future with a lot more optimism.